Medicare Finalizes New Rules To Collect Conditional Payments

The Centers for Medicare and Medicaid Services (CMS) has issued a final rule to tighten its procedure in collecting conditional payments made in workers' compensation actions.. On February 22, 2008 the Department of Health and Human Services published a final rule (PDF) in its program to strengthen CMS's ability to collect payments under the Medicare Secondary Payer (MSP) Amendments.


CMS has designated third party administrators (TPAs) and self-insured plans as "primary payers."

The rule continues to provide that, "...As is the case with group health plan and large group health plan insurance, Medicare may not make payment if payment with respect to the same item or service has been made or can reasonably be expected to be made under workers' compensation..."

The final rule removes the requirement that the reimbursement will be made "promptly" and now substitutes that the primary payer is "...obligated to reimburse CMS if and when it is demonstrated that the primary payer has or had primary payment responsibility. This responsibility may be demonstrated by a judgment, a payment conditioned upon the recipient's compromise, waiver, or release (whether or not there is a determination or admission of liability) of payment for items and services included in a claim against the primary payer, or by other means, including but not limited to a settlement, award, or contractual obligation. This means that a primary payer may not extinguish its obligations under the MSP provisions by paying the wrong party--for example, by paying the Medicare beneficiary or the provider when it should have reimbursed the Medicare program. Primary payers are expected to reimburse CMS when it is demonstrated that they have or had payment responsibility."

This rule supplements the recent legislation requiring the timely disclosure of information which was contained in the Medicare Medicaid and SCHIP Extension Act of 2007 and again reflects the Administration concern that cost shifting should not be transferred from workers' compensation onto CMS. The insurance industry continues to press for legislation that will would shift the burden from workers' compensation onto Medicare and require the US taxpayers to continue to supplement contested workers' compensation claims. CMS recently announced improper payments in 3 states amounted to $371.5 Million dollars alone. Previously this legislation was introduced and efforts to enact it failed.